The polypropylene plant at the Safripol complex in Sasolburg was commissioned in 1996 and has a capacity of 85 000tpa

KAP Industrial Holdings appears to be on track to complete its purchase of Safripol in what will be one of the biggest transactions ever in the regional plastics industry, for an estimated R4,1-billion

KAP, which is part of Steinhoff International Holdings, is to buy the Safripol polyolefins manufacturing business, with its main manufacturing plant in Sasolburg south of Johannesburg, in cash on a debt-free basis from Rockwood Private Equity, Thebe Investment and certain members of the group’s management in a transaction which is expected to be completed by January 2017.

Safripol manufactures HDPE and polypropylene. It will become part of KAP’s diversified chemicals division, which already includes Hosaf, the PET manufacturing business in Durban.

KAP is invested in a number of industry leading industrial businesses managed within two segments: Diversified Logistics and Diversified Industrial. The Diversified Industrial segment includes chemical operations comprised of its Hosaf and Woodchem businesses.

It is one of KAP’s strategic objectives to grow its business by investing in industry leading industrial assets that are complementary to its existing operations. The Safripol business operates in the chemical sector and produces complementary products to those of Hosaf, with a similar business model. The transaction represents an ideal fit for KAP in terms of its key investment criteria, being Safripol’s market leadership, high barriers to entry, strong cash generative qualities and competent management with sufficient depth and continuity.

Safripol will form part of the KAP Diversified Chemicals segment which will incorporate the Hosaf and Woodchem businesses.

If all conditions precedent are fulfilled, the effective date for the transaction will be 1 January 2017.